A gene is considered a candidate gene for type 2 diabetes in Pimas if 1)it has a physiological function in a pathway relevant to type 2 diabetes or obesity or 2)it is associated with a diabetic or obese phenotype in another population. Candidate genes which have been analyzed in the past year include the SHIP2 gene and PPARgamma. SHIP2 is part of a family of inositol triphosphate phosphatases. Tyrosine phosphorylation of SHIP2 occurs in response to treatment of cells with growth factors (ie-IGF-1) or insulin, and it has been suggested that SHIP2 plays a significant role in regulation of PI3-kinase signaling. The SHIP2 gene has been knocked out in mice, and the resulting phenotype is extreme insulin sensitivity. We have sequenced the exons and introns of the SHIP2 gene and have identified 5 novel polymorphisms. These polymorphisms were genotyped in 1300 Pima Indian DNA samples and 3 of polymorphisms were significantly associated with type 2 diabetes. We are currently sequencing BACs to generate the sequence for the putative promoter region of the gene (this region is not yet represented in the Human Genome database) and we will also screen the promoter for variants. A proline to alanine substitution in the PPAR gamma gene has been extensively studied and is associated with type 2 diabetes or BMI in several populations. We have genotyped this substitution in 1300 Pimas. In addition, we have sequenced the promoter region of this gene to identify additional variation. We identified two novel promoter polymorphisms associated with positive lipid balance due to a decrease in lipid oxidation and a decrease in energy expenditure. Our current in vitro functional studies with these promoter polymorphisms indicate that these polymorphisms do affect expression levels.